The Works tumbles on profit warning
Shares of The Works tumbled on Thursday as the retailer warned on profits amid a "challenging" consumer environment.
The company, which sells books, stationery and arts and crafts, said total revenue rose 5.4% in the 26 weeks to 27 October. However, stripping out the impact of last year's 'Mega Trend' - namely for Squishies - like-for-like sales were down 1.9%, as the business increased promotional activity.
The Works said that while LFL sales have improved in recent weeks, as the impact of last year's 'Mega Trend' eases, they were not at a level previously expected. As a result, it is now taking a more cautious view on trading ahead of the Christmas period and reckons full-year pre-tax profit will be "significantly below" current market expectations.
Chief executive officer Kevin Keaney said: "The consumer environment has remained challenging and we have been trading against strong comparators given last year's 'Mega Trend'. We have responded decisively to minimise the impact to our performance and are benefiting from easier comparators in the second half.
"We now look ahead to the busy Christmas period fully prepared and ready to deliver for our customers with a fantastic selection of good quality and great value products. Notwithstanding the current backdrop, we remain confident in our medium-term growth opportunities and we continue to invest to unlock them."
At 1120 GMT, the shares were down 42% at 45.11p.
Shore Capital analysts Greg Lawless and Clive Black said: "Against a challenging UK retail backdrop this is a disappointing trading update with profits guided significantly below current consensus of £7.3m in FY2020."